23 July 2014, News Wires – A Brazilian court blocked a bid by Italy’s Eni to force the government to honour its 2006 winning bid in an auction for offshore exploration rights that was later cancelled.
The government’s 2006 decision to suspend the auction and its 2012 decision to cancel the sale were legitimate and offered no recourse to grant ENI’s injunction, Reuters cited Judge Eugenio Rosa de Araujo, of the 17th part of 2nd Regional Federal Court in Rio de Janeiro, as saying in his ruling.
The auction was suspended and finally cancelled after the discovery of giant offshore reserves in a region known as the subsalt, south of Rio de Janeiro and near the block for which Eni had made the highest bid. The suspension and cancellation came before Eni could complete its purchase and sign a contract with Brazilian regulator the ANP.
The discovery of the subsalt reserves led the government to rewrite its oil rules. The new rules, first used in 2013, replaced the use of concession rights with production-sharing contracts in the subsalt region.
Eni bid 307.4 million reais ($142.3 million at the time) for the area, nearly double the next highest bid from Brazil’s state-led oil company Petrobras, Reuters reported.
The subsalt resources are trapped beneath a layer of salt under five kilometres or more of ocean and seabed.
Other companies that lost their winning bids at the cancelled auction include Repsol, India’s Oil & Natural Gas Corporation and Norway’s Norsk Hydro.